Digital payments in India, already witnessing unprecedented activity since Prime Minister Narendra Modi's demonetisation announcement in 2016, is likely to take a great leap forward post the general elections. The government is now looking to make a quick response (QR) code-based payment method using the Unified Payments Interface (UPI) mandatory for all shops and establishments beyond a certain threshold, The Times of India reported. The move had been approved by the GST Council before the Lok Sabha polls juggernaut started rolling and details of the payment mechanism are currently being worked out at the finance ministry.
The National Payments Corporation of India (NPCI), an umbrella organisation for all retail payments in India with 56 member banks, has reportedly been roped in to roll it out nationally. UPI is a real-time payments system that enables digital transactions between banks without the need to input NFSC code and other bank account details. All users need to do is make sure is that their mobile number is linked to their bank account(s).
Sources in the know told the daily that the idea is to introduce the payment mechanism for B2C transactions and bring about behavioural change, adding that consumers opting for this method of payment will be eligible for GST benefits along with establishments. In the medium to long-term, QR codes may also be introduced on invoices.
The development is in line with the discussions that the Centre as well as state governments have been having over several months, on leveraging digital payments to guard against GST evasion. Last August, the GST Council had even announced that states would roll out incentives for digital transactions on a pilot basis. The idea was to give customers making payments using Rupay card and BHIM UPI a cashback of 20 per cent of the total GST amount, subject to a cap of Rs 100. The states had to volunteer for this pilot project and Council had decided to take a call on a pan-India implementation based on their experience.
Previously states such as West Bengal were reportedly not in favour of the move, arguing that it would be against the interests of rural consumers. But taking cues from success stories globally, including China, the government is now moving full throttle on hashing out the new digital payment architecture. It has cause for optimism - after all, total payments through UPI have shot up to Rs 1.33 lakh crore in March 2019 from a meagre Rs 3.1 crore in August 2016.
With PTI inputs